HOUSINGNEWS REPORT
FINDING THE NEXT RENO
possibly make, tried to do it only once and lived a long time. Therefore if you want to get rich in real estate you simply make a lot of mistakes and live a long time. That also reminds me of the real estate joke where developers were having a big conference and were complaining how difficult it was to find good opportunities to invest and develop. Finally in the back of the room one developer said “oh I’ve found the great place; everything I am buying is increasing in value and we are doing very well.” A friend asks “where is it?” He said “do you think we are going to tell you?” Macro: Taxes and Schools I am not able to predict where the next opportunity will be but I am going to share with you some of the strategies and experiences we have had on this long road to real estate success. Our past includes 1920s high-rise bank buildings in downtown Los Angeles, office buildings and
high-rise apartments in Atlanta Georgia, industrial shopping centers, apartments and a MHP in Central Ohio, industrial and agriculture in the San Joaquin Valley and projects in Albuquerque and Dallas and many other locations. As a result we have learned that taxes have a high impact on economic development — both personal and business. If you look at a state’s overall tax picture and business incentives, you can often predict in what direction the area is going. Next would be schools. These are both macro factors in that they affect somewhat of a larger area. Micro Even More Important Most importantly in making a decision on a particular acquisition is the micro factors. If you are looking at an apartment these include such things as school system ratings, poverty ratio, the age of the property, maintenance efficiencies, occupancy and the conditions of cars in the parking lot.
The next opportunity may be within your own backyard or that may be the worst place to invest. Obviously the data and knowledge about the market may be easier to acquire close to home but we have found that the one constant is change. While your neighborhood is improving or declining, other locations are improving or declining and so on. With retail there is a different set factors such as how many cars per day go by the property and co-tenancy. Multi-family may be on a very busy street but with appropriate sound barriers and construction can be very successful. A shopping center without traffic seldom succeeds. There are numerous tests that can be undertaken with in-house underwriting — namely population trends and activities based on bank deposits, employment, post office receipts and activities etc. The key statistics with respect to property ratio, schools, residential and many other of these indicators are readily available on the internet for free. Underwriting also has to be done on-site regarding the condition of the building, quality of tenancy and operating efficiencies. If you are looking at a project and have not found anything wrong, you simple have not looked far enough. Reduce Inefficiencies Real estate is finding problems and determining whether or not you can solve them.
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FEBRUARY 2018 | ATTOM DATA SOLUTIONS
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